[aniketi]

Originally Posted by msdivy

Found this conversation with Uber Black driver on Quora:


Link: What is the average annual salary of an Uber/Meru/Ola cab driver in India?

Really??

I cant believe if this is true. 30k - 40k is ok but this is too much. If they are really making this much then its good for them. Even software engineers don't make this much to be true :(

Sometime back we hired a tempo traveler & he was the owner only. He didn't told how much he earn but i can calculate he was minting money. They charge Rs 15 per km & plus night halt charges. Also minimum 300 km per day is compulsory where they generate more money. Like we took for 3 days and hardly covered 500 kms. So for 400 Kms money was free. Also most of the times we paid for his food as a good gesture. Even if he does business for 25 days, he is earning good amount of money.

[msdivy]

Originally Posted by aniketi

Really??

From the information shared by members, it is possible for owner of the car to generate an earning (car revenue - car expense) of Rs 1.2 lakhs per month, provided the car driver does 10 trips daily on weekdays and around 15 trips per day on weekends.

Sometimes the owner hires a driver for a fixed salary and in that case the car driver makes a fixed amount.

[Mr. Nobody]

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[VSRK]

Indeed interesting thread! Recently used Ola services thrice in 24 hrs for Blr-Chn-Blr trip, railway station pick-up/drop. One thing I liked much is no bargaining with the drivers for the right fare, just convey the location, thats it .

No doubt, they are making good money. However, at the same it is taking toll on driver's health. Observed the drivers body language and his discomfort because of long working hours during my recent 11pm drop to Cantonment station. Also noticed, more youths (20-30 age) in drivers league than middle aged drivers who are little bit hesitant to join Ola's change wave.

One problem area is you cannot rely on Ola/Uber/TFS if you are planning to go to Railway/Airport drops because there is no guarantee whether you will get Cab or not. As they allow booking only 15 mins in advance, we cannot take chance to wait till the last hour for those trips (Though Ola allows advance booking, it's very odd to get booking slot, only God knows the reason).

[aishtin]

Not only Uber, I interacted with a cabbie of Ola from Bangalore Airport to my residence. He in fact told me that he drives only twice a week, and for the other days, he has salaried drivers who run his car. His car was running 24 hours per day. In around 2 years of time, this guy had made enough money to buy two more cars that he again deployed to mint money.
Hardwork pays. But driving a cab nowdays is not only hardwork,I think smart ones make the most out of this.

[DevendraG]

I've read here as well as on other sites that recently a lot of Venture Capitalists are pumping in money into such ideas even if it means incurring losses initially coz they CAN see the Big Picture & are WILLING to wait/reap it's benefits. But when I started thinking further on the losses part, it made perfect sense to me. Here's my thoughts:

1> Any business (non-skill type) requires capital & the ROI is expected after a certain time which is rather the break even phase.

2> Ola/Uber are simply aggregators & so haven't invested in buying cabs which would be the biggest cost driver in their business & hence the biggest factor that would decide their break even phase.

3> Because they're saving huge chunk of the investment & reducing the asset risk substantially, the actual risk appetite/analysis works out pretty controlled & measurable which explains the bonuses being paid out even if it means losses but quite less. It's a simple supply-demand & timing game. You strike at the right moment.

4> Also the time to launch is substantially less since you don't have pre/post cab buying process and in today's world everybody knows the importance of being there first.

5> Finally, mergers/acquisitions are done to further monopolize or get the biggest market share & this is when the moolah starts coming in.

[amit]

Please do read how much a Uber cab driver made in Philadelphia. Sign of things to come when Indian market matures?

Uber claimed their driver's are making USD 90,000 a year. Driver's refuted Uber's claims saying they make anywhere between $10,000 to 40,000 per annum. A journalist went undercover and made an average of $9.34 per hour - less then minimum wage.

Philadelphia journalist goes undercover as Uber driver.

[gk_fiesta]

2013 April, Bangalore
"Rs. 500 for an Indica AC", was the reply for an enquiry at the local cab operator for a drop till Majestic railway station from my home (Jayanagar 4-T Block), the distance is less than 10km. I did not go ahead.

Ola has been operational by then, and I booked one sedan online (there was no app that time) from Ola, which came promptly and dropped me off for around Rs.230. It was an Etios A/C.

From then on, I have never gone with the local taxi operators.

2015 April, Bangalore
Now with UberGo and Ola Mini, (hatchbacks in the respective services) the same trip above costs around 120-130.

Ever since that first trip I have been very curious to understand their business model, and how they Uber, Ola, and TFS (now Ola), and their drivers money. I have been taking Uber since Nov 2014, and till now I've taken around 55 trips in 3 cities with Uber, may be with Ola around 30 trips in 4 cities in the past 2 years. Yes, the stats shows what I prefer.

On how much the driver/owner can make, or are making: I've been talking to most of the Uber drivers whenever I take Uber to understand the compensation model, and see if there is any variation in the responses for drivers in the same city.

Here is what I could understand for Uber. They don't have a standard compensation plan for all cities in India. Even for the same city, it can change from time to time, as that market matures.

For e.g, in Bangalore the drivers get 80% of the trip fare (20% is for Uber), plus incentives for each trip during peak, non-peak hours that they do. There is no minimum trips or hours restriction in Bangalore. The driver can drive whenever he feels like, and he will get paid for it accordingly. They payment from Uber is weekly. Most drivers in Bangalore said (mostly sedan category) they get around 15K to 20K per week, which is 60K-80K per month. After maintenance charges for the vehicle, fuel cost, and EMI, they can save a minimum of 25K monthly.

So, in short, they can make around 60K-80K working around 12 - 14h ours daily, or approximately 10 trips a day min. For the same parameters (like mentioned above) the drivers with UberGo (hatchback) might make a little less (around 50K-60K)and UberBlack (premium, like Innova) can earn a little more (around 80K-120K).

Whereas in Kochi, which is a new market, Uber drivers are paid a fixed amount weekly, which is 10K as of now. Only point is they have to keep the instrument switched on for 84 hours in that week, and do a minimum of 22 trips during that week, no matter how short that trip is. On top of it, they are paid incentives for peak and non-peak hours. So a driver in Kochi right now makes around 50K.

The compensation plan of Uber or Ola will change as and when the market matures. For e.g, in Kochi it was 84 hours/week, and 18 trips/week until few weeks back. Now they made it 22 trips per week, but kept the hours same. So this will keep happening.

I'm not very sure about Ola's compensation structure but have heard that it is not as good as Uber's.

All the parameters like peak, non-peak hours, amount of incentive, % of fare the driver gets, per km fare, etc. are defined by Uber/Ola, and will keep changing from time-to-time, depending on how well the market matures.

Likely prespective of Driver or Owner
Make money now. Since people are making 60K-80K monthly, with say 30K as clean savings, it is good time to make money. They don't really think of VC's funds being burned, customer acquisition costs of Ola/Uber, how and when will Ola/Uber make money, and how long can Uber/Ola provide this etc. They are getting good money from this and they will continue as long as it doesn't drop sharply.

My assumption is that even if Uber/Ola reduces the incentives and compensation plan for drivers, the overall income generated for the driver should pretty much remains the same. I'm assuming that Uber/Ola will (reasonably) change the compensation plan only if the number of trips goes high - thus making sure that the drivers get more trips and a sign that the market is maturing.

User's perspective - Customer is King
The most benefitted entity is you and me. Cab on demand, at very reasonable price (Cheaper than autos for hatchbacks). No bargaining, arguments, comfortable pick-up at home (don't need to go out to the road to hail autos, works well for elders) etc. So even we can enjoy this period, and I hope Uber/Ola doesn't hike the fares for us ever!! (or anytime soon, at least)

[nareshov]

"Customer is King" - as long as at least one competitor in the market uses this perspective, there is hope for the customers. Else, it's a race to the bottom which other markets (such as the Indian Telecom sector) see.

Yesterday I took an Uber driven by a person from Mangalore! He had come to city barely four days ago.

[aashishnb]

At present, since they are spending investor's money to get both drivers & customers, everyone is making good use of it, including myself - it works out cheaper than a normal cab sometimes.

However, I hope the drivers do not get too dependant on this model and add a lot of debt - leading to a bubble and when it bursts many people end up being worse than they were before.

Reminds me of the mining boom that happended a few years ago. A lot of drivers from Bellary region in Karnataka (the new found mining hub compared to places like Jharkhand / Bihar which have historically been mning regions), bought massive dumpers, excavators, etc. on loans as there was huge demand for it.

Then, suddenly, the illegal mining was quashed by the courts, and all these people were not only jobless, but also had a white elephant. At one time, there used to be all these empty vehicles parked along the highway there.

Compared to this mining example, the benefit that the Ubers & Olas of this world have is that in most large cities, taxi permits are a rare / regulated commodity. For e.g. in Mumbai, new permits are not issued (or issued few & far between in lots). Most of these guys have to buy permit from an existing taxi permit owner. Thus, for every new cab added to these, a normal cab is taken off road. Hence, when the Ubers & Olas increase rates drastically to cover their costs, buyers like us may not have enough option to switch back to the normal cabs.

[SDP]

Originally Posted by aashishnb

...
However, I hope the drivers do not get too dependant on this model and add a lot of debt - leading to a bubble and when it bursts many people end up being worse than they were before.
....

Very good point and a brilliant example from mining.

For e.g. in Mumbai, new permits are not issued (or issued few & far between in lots). Most of these guys have to buy permit from an existing taxi permit owner. Thus, for every new cab added to these, a normal cab is taken off road. ....

Umm..I am not very sure about this. As per my understanding, taxi-permits are for black&yellow cabs and are highly regulated. Uber uses "T" permit yellow-board vehicles, which are basically tourist taxies and I don't believe there is any limitation in terms of "only these many are issued in the city" etc

[alpha1]

Originally Posted by aashishnb

in most large cities, taxi permits are a rare / regulated commodity. For e.g. in Mumbai, new permits are not issued (or issued few & far between in lots). Most of these guys have to buy permit from an existing taxi permit owner. Thus, for every new cab added to these, a normal cab is taken off road. Hence, when the Ubers & Olas increase rates drastically to cover their costs, buyers like us may not have enough option to switch back to the normal cabs.

If what you say is true, I think it is one of the most incompetent system (like most of the govt schemes). A large city grows each day! The citizens living in such a large city increase their income every year.

This simply means that the demand for taxi services only goes up at faster rate in a city. What is this circus about limited number of licenses and permits by the esteemed Govt? [As a side note, if govt and public really believe in licenses, regulations and permits, the first thing to bring under such control is the population or rather the ability to indulge in acts leading to increase of it]

And to pacify the alarming future you have drawn, there is always be a new startup trying to make its place among the older established players. Always.

If Uber and Ola jack up their prices tomorrow, there would be someone ready to fill their shoes at lower prices.

[SDP]

Originally Posted by aashishnb

....Hence, when the Ubers & Olas increase rates drastically to cover their costs....

Originally Posted by alpha1

....
If Uber and Ola jack up their prices tomorrow, there would be someone ready to fill their shoes at lower prices.

UBER is successful today because normal autos and taxis have become ridiculously expensive. Ricks in Mumbai cost around 11 Rs per km and taxis are 14 Rs per km. Cool cabs are 17 Rs per km IIRC. Ricks and Taxis have strong unions which have been arm-twisting the authorities and holding the commuters hostage regularly to demand unfair fare increase. Their margins are already fairly high; but the quality of service, availability and overall experience is pathetic. UBER seems to have correctly spotted this as an opportunity and is offering a much better alternative (AC cars, better maintained and newer vehicles, courteous drivers etc) at about the same price point.

Although UBER might believe their USP to be "better ride experience", for the typical price-conscious Indian customer, their USP is "better cars for similar fare". If you factor in the base-fare, for short rides, UBER is fairly expensive anyways. So I don't believe there is much head-room left for increasing the fares. If they do, they would end up losing their USP.

UBER as well as Ola know this and in fact have been reducing their fares in India since launch and also introducing low-price categories like UberGo and Ola-Mini.

About covering their costs, besides the technology platform and a skeleton staff, the UBER doesn't really have too many cost heads. They would eventually start taking a small cut from each fare to account for their own administrative costs and profit. When that happens, I expect the drivers to take home lesser than now. I don't believe UBER will do a rate hike to keep the drivers super-happy (i.e. same take home as earlier) at the risk of losing customers (who would have to pay more per km because of UBER commissions getting added to the fare).

[apachelongbow]

that sum of 1 -1.5 lakhs per month IMO quite inflated, even if it is gross and minus expenses it becomes 60-70k per month. For this kind of math to work, the driver must firstly own his car (even on EMI), be prepared to work 7 days a week, 365 days a year, not take a single hour time out, when he is slogging(driving) for up to 14 hours per day, not factoring in time for family, personal life, car maintenance, illness, etc.

Also consider the fact that not every one of his 14 hours per day will be productive, in this kind of business, some days he may make 10 trips netting a good income and some days zilch. Some days he may get stuck in traffic, in flooded roads etc. What if his car meets with an accident? what if it gets stolen? The insurance provided by the cab aggregators is nil, its all borne by the driver and the car owner...

Most drivers I know make between 10k to 15-20k per month net, some may touch 25-30k per month on a good month, but this is after back breaking hard work with each day lasting up to 16 hours, with no time to rest, sleep or eat. And this is not factoring the tremendous stress one undergoes if he/she drives our idiotic streets for a living.
For all those who want to moonlight as a Uber driver or who complain that them being educated/graduate and still not taking home a lac per month, the grass is always greener on the other side of the fence, and to make big money, one has to do something special, run of the mill jobs and professions, or ambitions or skills will not cut it..

[aashishnb]

Originally Posted by alpha1

If what you say is true, I think it is one of the most incompetent system (like most of the govt schemes).
===============
If Uber and Ola jack up their prices tomorrow, there would be someone ready to fill their shoes at lower prices.

Originally Posted by SDP

Umm..I am not very sure about this. As per my understanding, taxi-permits are for black&yellow cabs and are highly regulated. Uber uses "T" permit yellow-board vehicles, which are basically tourist taxies and I don't believe there is any limitation in terms of "only these many are issued in the city" etc

This limited availability of permits is based on a conversation with one of the earlier taxi service drivers I had (Meru, Tab, etc.). Could be that these 'aggregators' do not follow the 'Radio Taxi' licence which are limited.

I think the number of permits for taxis are limited / sold in lots by a lottery system to control pollution, etc. Not sure how successful they are. Another reason could be that the existing taxi / rickhaw associations do not allow a lot of supply.

Originally Posted by SDP

UBER is successful today because normal autos and taxis have become ridiculously expensive.
=============
I don't believe UBER will do a rate hike to keep the drivers super-happy (i.e. same take home as earlier) at the risk of losing customers (who would have to pay more per km because of UBER commissions getting added to the fare).

I was doing simple maths here. The cost of operations of a Uber cab > a normal blue cool cab > a black & yellow cab > rickshaw.

However, Uber's business model, at least currently, is similar to the E-commerce business model - use investor money to acquire customer by subsidizing / discounting sales so that they get used to it. What they call in the industry - 'Customer Acquisition Cost'. E.g. A book with MRP of Rs. 150, costs the dealer Rs. 120, but is sold at Rs. 90. Similar thing is happening to Uber / Ola. They pay the driver more than what they get from the customer. This 'loss', is funded with investor money.

Therefore, at some point of time in future, to turn profitable & cash flow positive, they will need to either reduce costs i.e. pay less to drivers or increase revenues i.e. charge the customers more. They have already started charging customers more using the Peak Period Surcharge where fares go up between 1.2X to 2.2X.

There is 1 silver lining here - better utilization of the asset, which is where the incremental revenues will come from. Under the traditional model, a customer has to get on the road and look for a rickshaw / cab & get lucky to get one immediately or wait for one to arrive. On the other hand, the driver is also waiting at some place or roaming around for a customer to come. Under the 'aggregator' model, both customer & driver can get to meet each other more efficiently, thereby reducing idle time & better utilization the asset. Only if the efficiency increase i.e. the time the cab is occupied with 'meter down' is more than the incremental cost (Uber / Ola commission in a normal world where they do not subsidize), will it still be cheaper / at par with the traditional model.